Over the years, real estate professionals from The Dar Walden Team have worked with several Alaska buyers to help them secure a loan for their home. As a result, we've become well-versed in the factors that lead to success when applying for a mortgage, and we want to make sure that prospective home buyers are aware of the possible hindrances beforehand to avoid any troubles they may encounter.
Buying a property can be a long and sometimes taxing undertaking, so thwart any additional stressors by being well prepared and ensuring that your loan will be approved without a hitch. If you're not exactly sure where to start, worry not. Our team has compiled these 7 critical keys to acquiring a loan so that you can move onto the next steps of your buying journey!
Maintain Active Employment Status
Switching employers during the mortgage approval process can be damaging, especially if you don't go about it in the right manner. Stability and consistency in employment are major considerations for mortgage lenders, since they want to make sure your income is reliable in the long term. That being said, if you absolutely must change your job during this time, notify your lender as soon as you can. You'll likely need to provide new documentation and prove that you'll be able to make your monthly payments without issue. Keeping your lender in the loop can prevent this job change from affecting your chances of approval too much.
Avoid Making Major Purchases Or Investments
Sometimes, it's completely necessary to make a big payment. Things like weighty medical bills, tuition fees, or a large car repair are simply too important to avoid. But when you're applying for a mortgage loan, it's not the time to head to the home improvement shops to buy new finishes and materials for your new home. We get it — it's an exciting time. It's easy to get tempted into shelling out for sparkling new appliances and fixtures to make your new property your own. Still, try to hold off on any major transactions, at least until closing.
Avoid throwing off your debt-to-income ratio, even if that means living without stylish suede couches and a gas cooktop for a few months. To avoid disqualification, stick to spending lightly on necessities only until the deal is closed and you have the keys.
Keep An Eye On Your Credit Card
It's crucial to keep your credit card debt to a minimum during the approval timeframe. Aim to maintain your debt at less than half of your credit limit, or even lower if you can swing it. Most importantly, make sure to always make your payments on time. While the consequences for a missed payment are always a nuisance, the potential effects are even more risky than a little interest and a self pep talk about your credit score. All your financial moves are being carefully assessed during this process, so you should be on top of your game.
Don't Apply For New Credit
This is not a good time to consider applying for a new credit card or line of credit. If a furniture or hardware store is enticing you with offers of a line of credit with miniscule interest payments, don't cave. Don't even cosign on another loan! Keep your financial activity in check, because your lender will pick up on your choices and this could impact your prospects of qualifying.
Don't Move Money Around
One of the best ways to improve your likelihood of being approved is simply to keep your hands off your bank account. It may seem harmless, but just moving money between accounts can be detrimental. Don't make any changes to your bank accounts that you may have to justify to your lender.
Keep Your Savings Account Intact
Your lender has your savings information from the time of your loan application and has taken this into consideration. If you spend money from your savings account, you jeopardize your chances of qualifying. Your savings are considered to be "liquid assets" — in other words, assets that could allow you to continue making payments if other aspects of your financial security net fall through. Significant savings make you look less risky in the eyes of the lender, so don't dip into those savings while you're waiting to be approved.
Be Speedy With Your Paperwork
Attention to detail is important, but try to get your documents in as soon as you feasibly can. It's not unusual for tax returns to slow things down, so start as early as possible. This type of organization and advance action will serve you well in all stages of your home buying experience.
We hope you find this advice helpful and wish you the best of luck with your home loan. If you'd like any further or more personalized advice, contact The Dar Walden Team today at 907-240-2804. We can help you with any and all details of your Alaska property purchase!